The civil economy model has been developed and extended in new ways by Emeritus Pope Benedict XVIÕs social encyclical Caritas in Veritate, along with the works of Bruni, Zamagni and other economists writing in this tradi- tion.55 More recently, civil economy ideas have helped to shape post-liberal economic thinking in Britain, Australia and elsewhere. In this section we explicate some key practical implications of a post-liberal civil economy
of virtue before we set out a number of policy ideas in the remainder of the chapter.
Anti-Usury and the Sharing of Risk and Rewards
Usurious interest rates allow banks and other financial institutions such as payday loan companies to make profits that are vastly disproportionate to the economic and social contribution of their lending activities and their risks. They also take advantage of the financial distress of many people who are left with no choice but to take out credit at interest rates that are economically inefficient and ethically indefensible. Therefore, the lending of money needs to be tied as much as possible to real investment, and banks made stakeholders and therefore risk-carriers in the enterprises that they fund. In line with the principle of reciprocity, a truly ethical economy would establish the sharing of risk and reward in all financial transactions Ð including house mortgages Ð between lenders and borrowers, investors and owners, shareholders and managers, employers and employees. In order to transcend capitalismÕs simultaneous abstraction and materialisation, at every level financial sign needs to be reconnected with material power in order to prevent the specula- tive, social and ecological threats of their disjuncture.
Lenders of money, from high street banks to building societies, should as much as possible be regarded as investors in the businesses they purport to back: as part-liable for the risks incurred by borrowers on the one hand, and also as co-partners and advisors in the enterprises that borrowers undertake, on the other. This would involve a mutualisation of banking and real estate financing wherever possible. A loss of excessive economic power would be balanced for such bodies by an increase in social power, provided this is linked to an increased exercise of social responsibility. Equivalently, a slight loss of economic autonomy for the individual owner is balanced by three elements: greater shared economic security; heightened rights to a stake in the success of the bank to which one belongs; and an increase of influence over community agreements about the shape of the built environment and collective projects of many diverse kinds. Hence, such proposals retain the realism of an appeal to collective and individual interest, yet also require a cultural transformation in which people somewhat modify their aspirations Ð even trading some isolated power to choose against an increase in social power and community involvement. Since the latter allows more complex psychological satisfaction and more intense social recognition and convivi- ality, such a transformation is by no means inconceivable. But while it can be encouraged at the political level through new incentives and rewards, in the end this change in ethos requires a cultural renewal. And people cannot opt for what they have never been offered. The realism of renewal is that it
must perforce begin among a minority, whose convictions can, nevertheless, realistically prove contagious if they begin to be successfully exemplified in practice.
As to investment in manufacturing and other productive enterprises, the primacy of short-term shareholder value needs to be replaced with a legal requirement that companies pursue primarily a clearly stated purpose of long- term economic and social benefit. This is not, however, to be taken as a sim- ple attack on the shareholder: rather, it would necessarily involve a favouring of the longer-term over the short-term shareholder Ð whose holding today may sometimes be a matter of indifferent seconds. Longer-term investment would be made more attractive in terms of both higher and securer dividends, and an increased measure of responsibility for the firm, that would tend to hold in check any executive exploitation. Equally, executives would be more empowered to guard against rogue shareholders who have not identified their own with the corporationÕs interest.
Just Wages, Just Prices and the Distribution of Assets
As part of this cultural alteration, the divorce of the meaning of material mar- ket ÔgrowthÕ from its root meanings of organic, moral and spiritual growth should be called into question. If we could collectively imagine a shared scale of priority in desiring, we would also remove the scarcity-driven oscillation between the relative emphasis on the respective imperatives of consuming and production, demand and supply. For this shared scale would tend to infuse into transactions Ð prices, wages, shares Ð a greater sense of its natural justice, over and above prevailing market conditions. We could then have some sense of a ÔproperÕ price paid for a thing of such and such moral as well as economic value; of a ÔproperÕ wage or salary paid for such and such a social task involving different degrees of talent, labour, scope, risk and need for a strenuous exercise of virtue; of ÔproperÕ shares in a firm as between the appropriately weighed contributions of owners, managers and workers.
All these things need first and foremost to become habitual through the growth of a new ethos. But at the same time, they should at the limits of claimed infraction come within the purview of law and judicial debate. For once a company is required to have a social as well as an economic purpose, then all contractual exchanges should by law be required to be equitable as to substantive content as well as to formal consent. Subsidies to large corpora- tions need reducing in any case, but where corporations of all sizes are in any way subsidised, the degree of subsidy needs to be indexed to the degree of just economic practice. By the same token, sheerly financial transactions need to be taxed much more severely, and the proceeds given to the encouraging of research, technological and manufacturing development.
Far from all this being an infringement of a contract freely entered into, it is its very precondition. For where a contract is in any way unjust, or finally lacking in substantial purpose of human benefit, then this implies that some element of risk-taking, or of committed labour or of valid desire, has been alienated and removed in a unilateral and coercive fashion by one party from the process of market exchange itself.
Free Guilds and Vocational Entry Points to the Labour Market
What is also needed is a general re-creation and reinvigoration of professional associations, which still play a considerable role in countries such as Germany, Austria and Italy. Such institutions can instil an inter-firm ethos based upon the idea that one achieves self-respect and social recognition by making and trading something good and not by merely making money. Furthermore, it is the work of the guild that truly resolves the aporia of monopoly whereby state anti- monopoly legislation can often constitute an unwarranted intrusion within market competition that can even help to further the rise of alternative monopolies or cartels.56 Here, once more it is Polanyi who had the vital insight: monopolies and cartels tend to be generated by the most free-booting and egoistic participants in the market. Hence a guild restriction of competition to those signed up to guild principles actually tends Ð through a paradox that resolves the aporia Ð to ensure competition by slightly restricting competition. It thereby achieves what the ordo-liberals desired, but failed to realise through an insufficient allowance of a justifiably corporatist dimension.
However, to avoid monopolistic corruption consequent upon guild operation itself we need a new idea of free guilds that enjoy no legally established sole right to trade. Licensing by a guild organisation could then become eco- nomically advantageous in the way that a Fair Trade label is today, because customers would receive, a certain guarantee of good quality of produce, fair treatment of all stakeholders in the enterprise, and of consumers themselves. This notion of a Ôfree guildÕ also helps to meet the objection that guilds cannot cope with new trades and industries, which arise with ever-increasing frequency (for example in the services sector). For the latter need not be inhibited by the vested interests of established corporations, yet at the same time are provided by them with a model of the benefits of submission to guild standards that they can then imitate. Equally, guilds might facilitate the con- tinuity and transfer of pension and other entitlements between changing jobs and employers. Inversely, a certain subordination of technology to relatively stable human ends might be served by bringing new technologies within the scope of existing guilds: we could then more easily ask, for example, what social purposes the mobile phone and the computer precisely serve and under what best permissions and restrictions. Likewise a guild-encouragement of
the pursuit of more integrated ends might somewhat restrict in the future con- stant job-shifts related more to the distorted objectives of pure finance than to technological innovation and creative flexibility. Thereby the purposive conservatism of guilds could also have a radically protective function.
In addition, we need to put in place more robust institutions that initiate people into professions through vocational training Ð especially for profes- sions such as law and banking that have lost this dimension in relatively recent times.57 One might distinguish here between compulsory professional associations overseeing entry qualifications and then safeguarding a minimum of good practice, and the free guilds, which would be voluntary and exist in order to shelter and encourage more stringent standards.
A New Political-Economic Corporatism
If businesses, professional associations and other corporate bodies (for exam- ple universities) are to be officially encouraged to take social responsibility, then reciprocally they should exercise a share in political governance. There needs to be a more modern political participation through mŽtier, alongside a more traditional (and ecologically crucial) one through terrain. This is a radi- cal theme all the way from Durkheim via G.D.H. Cole to Paul Hirst, as well as a conservative one from Burke via Hilaire Belloc to Christopher Dawson.58 It has been perverted into totalitarianism only when (a) it has altogether displaced the representative government of individuals and localities, (b) it has been centrally directed and made compulsory and (c) it has disguised a continued capitalist exaction of surplus value from workers with an organic gloss of kitsch falsity.
Here Pope Emeritus BenedictÕs support for stake-holding and share-distri- bution seems to indicate a break with the German Catholic legacy of Cardinal KettelerÕs reading of Ôco-determinationÕ as if capitalists were the authentic equivalents of feudal overlords rather than people whose wealth had mainly been acquired through unjust exploitation. Thomas Carlyle had been more adamant about the need for transformation Ð if this ÔfeudalÕ equivalence, in a more democratic form, were now to hold: his ÔCaptains of IndustryÕ were required in future to heroically subordinate their ownership and direction of resources to the more dispersed needs of now free workers.59 But one can add to Carlyle that we also need far greater levels of participation in the ownership of the Ômeans of productionÕ Ð though not outright enforced collective or democratic ownership, which always cedes to a tyrannical bureaucratic control by a new activist elite. These degenerations can be discouraged and even avoided if the churches and other religious and philanthropic bodies help to coordinate inter-corporate governance without all this being routed through the centralising administration of the state.
Fostering Virtuous Enterprise
The dominant business model of most advanced economies is based on two elements: (1) individual incentives that influence ex ante motivation Ð whether in the form of private sector performance-related pay and bonuses or in the form of public sector policies ÔnudgingÕ our behaviour towards greater efficiency and happiness; (2) individual rewards, usually conferred without regard to social, ecological or ethical purpose. The problem of the underlying logic is fourfold: First, it sunders ex ante motivation from ex post outcomes, which leads to the perverse situation of rewarding failure (bonus payments and golden handshakes even in case of losses or bankruptcy). Second, it privileges private self-interest and views social benefit merely in terms of indirect, unintended outcomes. Third, it designs incentives purely in extrinsic ways, and reduces the question of reward to a principalÐagent relation whereby the principal rewards the agent and makes herself better off too (e.g. top management and large shareholders). Fourth, it separates monetary from non-monetary rewards, which divorces material value from symbolic worth.
In order to change all this, the idea that economic ends are not inherently ethical ones needs to be challenged. It is crucial that virtue be pursued for its own sake. Yet at the same time, virtuous behaviour may yield pleasure or even profit while also making a contribution to the common good.60 For this reason, it is not inappropriate that it can also be publicly encouraged by monetary recompense (e.g. tax breaks, preferential treatment in terms of gov- ernment procurement or public service tenders).
The Primacy of Land, Locality and Craft
Amid a general rural exodus, we need to remember that it is the countryside and the organic relation of the city to the countryside which most guarantees our animal rationality. The countryside is basic in terms of food provision, ecology and our sense of beauty. It remains, therefore, the focus of prime concern as to how we maintain our human creativity and sustainable economic innovation alongside our sense of wonder and purposive place within reality. A failure to comprehend the primacy of the land threatens the integrity of cities most of all, because a false primacy of the urban has encouraged an over-concentration of population and the rise of the sprawling mega-city (symbolised in London by the dwarfing of the sublime spires of the peopleÕs churches by the monstrously vulgar temples to Mammon) which inevitably destroys its real function as the fulcrum of trade, craft and artistic flourishing as well as philosophical discussion. Instead, the mega-city has often become a site for debased modes of mass manufacture, monopolistic, self-serving financial services, middle-brow culture often masquerading as
AQ: The phrase ÔTo this endÕ seems cor- rect in the context. Please check if the text ÔTo its endÕ is appropriate.
the avant-garde, and media diversion of our attention from the real issues of power and complexity towards a trivial politicisation of personal life.
Intellectual failure with respect to our understanding of our place within nature has also a physical equivalent. The more that land is enclosed, the more also local ecologies are destroyed, as the earth depends increasingly upon one fragile global ecological balance. But in the end, of course, the global ecology of gaia itself depends upon the various local ecologies, and with their evermore reduced functioning, it would eventually collapse.61 We therefore need to grasp the ways in which new lighter and green technologies can permit once again a wider inhabitation of the surface of the globe. Rural and now remote areas can be brought to life once again, while cities can recover their functions as centres of human meeting, and concentrations of excellence and example.
But this means rejecting the fatalism that assumes that an evermore advanced economy requires an evermore automated labour and the gradual replacement of human labour altogether by anonymous processes. For this is not, in reality, the implication of ÔprogressÕ, but rather of a liberal capitalist process directed towards the abstraction of profit instead of the genuine ÔeconomisingÕ of human effort towards the end of human flourishing. To its end, capitalism requires endlessly to save on labour costs, even though it must eventually reckon with a consequent decline in demand, which it is increasingly tempted to make up through the credit mechanism and modes of employment that tend evermore to modes of slavery without the security that was sometimes the slavesÕ compensation. But the pursuit of human flourish- ing suggests, instead, that technology should be used to extend rather than to displace individual human creativity. This makes sense both insofar as work satisfaction is an irreplaceable aspect of human existence (as opposed to the eventual tedium of leisure without contemplation), and insofar as the blend of craft with automatic process produces superior results. This is most abun- dantly true with respect to agriculture, where food quality and environmental sustainability benefit from a more labour-intensive approach that resorts less to drastic and rapid ÔsolutionsÕ such as crop-spraying. And in all fields of pro- duction, this approach helps to ensure that fewer people are confined to those marginal, temporary and precarious jobs that are still required to paste over the communicational and organisational gaps, which even the most exhaustive extension of the automatic tends to leave in place.62 We need, therefore, to revisit attempts such as that of Glasgow at the turn of the nineteenth century to combine mass manufacturing with craft design.
Such moves would also strengthen the link of craft between city and countryside, as still pertains to some degree in Italy today. We also need something like the traditional Italian sense of locality, comprising city and commune as a relatively self-sustaining economy in accordance with an
AQ: Could Ôthe price of labourÕ be changed to Ôthe cost of labourÕ
economic application of the subsidiarist principle. This should include the local owning and organising of energy companies, geared whenever possible towards renewables, in order to undercut giant private companies (which would be either mutualised or, if necessary, broken up). Such local economies are more stable and resilient and more productive of excellence and social solidarity. At the same time, their existence can drastically reduce global transport costs, which are only ÔefficientÕ in terms of a near-hysterical search to reduce the price of labour.
These things would increase the appeal of staying on the land in order to achieve a more stable agriculture and to sustain that rural beauty which is ulti- mately our cultural lifeblood. On the basis of a wider distribution of property, Western countries need to reinforce intensive small-scale farming requiring crop rotation, common grazing, a much greater number of agricultural workers and many practices of mutual assistance. All in all, this beneficial circulation would allow the emergence of a good natural and social ecology: a fine balance of interaction between person and person and between person and nature, as Pope Francis argued in his social encyclical Laudato SiÕ.63
It is within this cultural soil that revolutionary Western advancements in